U.S. housing starts fall to 10-month low

WASHINGTON, July 17 (Reuters) - U.S. housing starts andpermits for future home construction unexpectedly fell in June,further evidence of a sharp slowdown in economic activity in thesecond quarter.

The Commerce Department said on Wednesday housing startsdropped 9.9 percent to a seasonally adjusted annual rate of836,000 units. That was the lowest level since August last year. May's starts were revised up to show a 928,000-unit paceinstead of the previously reported 914,000 units.

Economists polled by Reuters had expected groundbreaking torise to a 959,000-unit rate last month.

Permits to build homes fell 7.5 percent last month to a911,000-unit pace. Economists had expected them to rise to a1-million unit pace.

The report was the latest indication that economic growthprobably braked sharply from the first quarter's 1.8 percentannual pace. The economy has been hit by tighter fiscal policyand slowing global demand.

The housing market has been providing a buffer against thoseheadwinds.

Sentiment among single-family home builders hit a 7-1/2 yearhigh in July, a report showed on Monday, amid optimism overcurrent and future home sales. But many builders have beencomplaining about a shortage of labor and materials, which mayhave contributed to last month's surprise decline in activity.

Last month, groundbreaking for single-family homes, thelargest segment of the market, slipped 0.8 percent to a591,000-unit pace, the lowest since November 2012. Starts formulti-family homes declined 26.2 percent to a 245,000-unit rate.

Permits for multi-family homes fell 21.4 percent to a287,000-unit rate. But permits for single-family homes rose 0.6percent to a 624,000-unit pace, the highest since May 2008.